Banks Seek Profits in CBDC, Stablecoin and Token Race

Banks are weighing which parts of digital-money ecosystems they will operate and which they will place on third-party rails. Key choices include issuance, custody, on- and offboarding, and settlement for central bank digital currencies (CBDCs), stablecoins and tokenised deposits.

Each form of digital money has different infrastructure and process needs. CBDCs typically require connections to central bank systems, strict custody arrangements and settlement finality. Stablecoins rely on issuers’ controls over minting and burning, reserve management and on-chain interoperability. Tokenised deposits resemble traditional bank liabilities but require tokenisation layers, smart-contract logic and integrated payment rails to convert between token and fiat forms. Customer onboarding, KYC/AML and compliance checks remain bank responsibilities across all models, even when token movement and record-keeping occur on external systems.

Settlement and liquidity mechanics vary by instrument. CBDC settlement can deliver instant finality when central bank systems are used, which means banks must hold balances at the central bank and manage intraday liquidity in real time. Stablecoins and tokenised deposits often settle on distributed ledgers, producing a mix of on-chain and off-chain finality. That mix complicates reconciliation and float management. Real-time payment systems have already tightened liquidity buffers for banks; adding token rails can increase intraday needs because minting, burning and cross-rail settlement introduce timing mismatches between token balances and reserve deposits.

Operational costs extend beyond initial technology build. Banks must fund continuous ledger reconciliation, custody and insurance for tokenised assets, upgrades to compliance and reporting systems to capture on-chain activity, staff training, legal work across jurisdictions and ongoing platform fees. Reserve segregation or temporary liquidity provisioning for minting and burning can create capital and funding costs. Integration testing, incident response and maintaining audit trails for token flows add recurring expense.

Control is affected when functions run on platforms banks do not own. Use of third-party chains or smart contracts can reduce execution visibility and increase dependence on external security practices. Some banks plan to keep customer-facing functions such as KYC, deposit taking, custody and settlement hub services while connecting to external token rails through certified gateways. Other banks are testing permissioned ledgers or sponsored nodes to retain more control over settlement.

Outsourcing digital-money functions differs from traditional third-party arrangements because code-level access and on-chain observability are limited. Contracts with platform providers are being written to include service-level metrics for ledger availability, incident response, audit access and clear rules for minting and burning. Governance and operational guardrails are being developed for operations across jurisdictions with differing reserve, disclosure and consumer-protection requirements.

Banks are exploring new revenue streams from custody and safekeeping for tokens, settlement-as-a-service, tokenised asset distribution, liquidity pooling and programmable products such as automated corporate payments and conditional lending. Several institutions are running pilots that keep core control points-onboarding, reserves and settlement finality-while testing commercial models, liquidity workflows and compliance under stress scenarios. Interest in stablecoins and tokenised finance has increased following recent legislative discussion in the United States, and banks have accelerated proof-of-concept work to test infrastructure and policies against local reserve and reporting rules.